The upcoming US January nonfarm payrolls report is expected to contain more significant information than usual. Originally scheduled for February 6th, the release was delayed due to a partial government shutdown. This report will reveal the extent of the recent slowdown in the US labor market—and may even indicate that growth has stalled. Beyond the standard monthly figures for job gains and the unemployment rate, the January report to be released on Wednesday also includes the highly anticipated annual benchmark revision of nonfarm payroll figures. Preliminary estimates suggest a record downward revision of 911,000 jobs for the period up to March 2025, with the update expected to show a significant deceleration in the pace of employment growth.

Scott Anderson, Chief US Economist at BMO Capital Markets, stated, "This year's annual benchmark revision will carry more weight than usual. The labor market currently appears to be in a delicate balance between net job gains and potential job losses." The annual data revision is anticipated to reveal more moderate employment growth. Each January, when the nonfarm payroll report is released, the Bureau of Labor Statistics (BLS) benchmarks the data against a more accurate but less timely series called the Quarterly Census of Employment and Wages. This data, based on state unemployment insurance tax records, covers the vast majority of US jobs.

In addition to publishing the adjusted employment level for March 2025, the BLS will also release revised data for monthly job changes throughout the previous year. These revisions also reflect updates to the agency's model, which accounts for business openings and closings and incorporates new seasonal adjustment factors. Economists had already broadly concluded that the labor market weakened gradually last year, overall characterized as a "low hiring, low layoff" environment. However, this revision may show that the slowdown in hiring was more pronounced than previously understood.

This could alter the Federal Reserve's perspective on the labor market. Fed Chair Jerome Powell recently described the current labor market as showing signs of stabilization. He suggested that job growth might have been overestimated, but that the overall economy remains robust enough for officials to hold interest rates steady for now. However, his colleague, Fed Governor Christopher Waller, disagrees. Explaining his vote for another rate cut at the January Fed meeting, Waller indicated that the revised data would likely show almost no job growth last year. Waller said in a statement, "Zero. Nothing. Nada. That doesn't look like a healthy labor market to me at all."

Data released last week supports Waller's view. Announced job cuts by US companies reached the highest level for any January since the worst of the Great Recession. Simultaneously, job openings fell in December to their lowest level since 2020. Regarding the more conventional part of the January jobs report, the median forecast from a survey of economists suggests nonfarm payrolls may have increased by 69,000. The unemployment rate is expected to hold steady at 4.4%, slightly below the four-year high of 4.5% touched in November.

Economists at Wells Fargo noted in a report, "The January jobs report is unlikely to change the overall picture of a relatively weak labor market." The revision will not affect the unemployment rate, as that figure is derived from a survey of households, whereas the nonfarm payroll number comes from a separate BLS survey of businesses. Typically, the BLS incorporates new population estimates into the household survey with the January jobs report. However, due to last year's record-long government shutdown, this adjustment was postponed by one month.

In recent years, revisions to jobs data have generally been larger than in the past, a trend some economists attribute to the unique economic dynamics of the post-pandemic period. The issue of revisions is also highly politicized and was a significant factor in former President Donald Trump's decision to fire a previous BLS commissioner, whom he accused of manipulating data for political purposes. When appointing a new commissioner recently, Trump again criticized the BLS, calling its past numbers "highly inaccurate." Most economists, however, dismiss such claims.

Jed Kolko, a senior fellow at the Peterson Institute for International Economics, stated during a webinar on January 29th that revisions are inevitable as more source data becomes available. He argued that these adjustments help data providers balance speed with accuracy and maintain comparability over time. Kolko, a former Under Secretary of Commerce for Economic Affairs, said, "Revisions create confusion, sometimes fuel conspiracy theories, and sometimes even get people fired. But as long as the revision process is transparent, anticipated, and well-documented, revisions should actually make you trust the official statistics more."